Hardayal Hardy, J.

(1) This case and the connected case viz. I.T.R. No. 35 of 1966 arise out of an assessment to wealth tax of two brothers, namely, Shri Mela Ram and Shri Ralya Ram. They are both partners in the firm Messrs. Ralya Ram Mela Ram of Delhi and each partner has an equal share. The reference relates to the assessment year 1961-62 and the date of valuation is 31-3-1961. The question referred to this Court relates to the construction of Section 7(2)(a) of the Wealth Tax Act, 1957 which will hereafter be referred to as the Act. It reads :-

'WHETHERon the facts and in the circumstances of the case, the Tribunal rightly valued the assessed's one-half share in the firm M/s. Ralya Ram Mela Ram including the property known as No. 2 Keeling, Road New Delhi, on the basis of the balance sheet value ?'

(2) The facts in the case of assessment of Shri Mela Ram in I.T.R. No. 34 of 1966 are the same as in the case of his partner Ralya Ram in I.T.R. No. 35 of 1966, and are as follows:-

SHRIMela Ram who will hereafter be described as the assessed and his brother Ralya Ram are two partners of the firm M/s. Ralya Ram Mela Ram of Delhi, having equal shares. Amongst assets the said firm owns property known as No. 2 Keeling Road. New Delhi. which will hereafter be described as. 'the property.' The site on which the said property stands consists of land measuring 1.4 acres. It was taken on perpetual lease from the Government in 1933, by the firm of Ralya Ram Mela Ram on payment of a premium of Rs. 4700.00. The firm thereafter constructed 1' storeyed building thereon covering l/3rd of the area of the plot in 1935-36 at a cost of Rs. l,22,296.00. A portion of the building is used by the two partners for their residence while the remaining portion is used as office of the firm. The total cost of this property to the firm was Rs. l,26,996.00. In the balance sheet of the firm as on 31-3-1961 which is the valuation date in this case, the property stands valued at Rs. 1,26,996/72. In the wealth tax assessments for the years 1957-58 to 1960-61. this property was uniformly valued at Rs. 2,00,000.00 and the assessed was held to hold one-half share therein which was valued at Rs. 1.00,000.00.

(3) The assessed pleaded before the Wealth Tax Officer that his onehalf share in the firm should be adopted as given: in the balance-sheet.. The Wealth Tax Officer accepted the plea subject to one modification. He accepted that the value of the assessed's one-half share in the firm as per the firm's balance sheet was Rs. l,04,980.00. This amount however included the assessed's interest in No. 2 Keeling Road, New Delhi, which as said before, was valued in the balance-sheet at Rs. l,26,996.00. According to the Wealth Tax Officer, there was a great discrepancy in the market value of the property and the balance sheet value thereof. He thereforee valued the property separately at the current market rate and excluded Rs. 63,498.00 (being one-half of Rs. l,26,996.00) from Rs. l,04,980.00 and valued the assessed's one-half share in the firm, excluding his share in this property at Rs. 41,482.00. He separately valued the whole property at Rs. 5,00,000/ and held that the assessed's one-half share therein was Rs. 2,50,000.00. . In short, the Wealth Tax Officer valued all the assets of the firm, except No. 2 Keeling Road property, as per the balance sheet under Section 7(2)(a) of the Act while he valued No. 2 Keeling Road at its market value under Section 7(1) of the Act.

(4) The assessed preferred an appeal before the Appellate Assistant Commissioner of Wealth Tax who confirmed the decision of the Wealth Tax Officer.

(5) A second appeal was thereupon filed by the assessed before the Income-tax Appellate Tribunal in which his contention was that since the property No. 2 Keeling Road, was an asset of the business and regular accounts were maintained regarding the assets of the business, it was obligatory upon the Wealth Tax Officer to determine the net value of the assets of the business as a whole including this property, having regard to the balance sheet of the said business as on the valuation date, in accordance with Section 7(2)(a) of the Act. The valuation of the property by the Wealth Tax Officer under Section 7(1) of the Act was thereforee erroneous.

(6) The Revenue on the other hand contended that the Wealth Tax Officer had un-fettered discretion to value the assets of the business either under Section 7(1) or under Section 7(2)(a) of the Act and that it was open to him to value some of the assets of the business under Section 7(1) and the remaining assets of the very same business under Section 7(2)(a) of the Act.

(7) According to the Tribunal, Section 7(1) is a general provision while Section 7(2)(a) is a special provision and that under the normal rules of construction the special provision where applicable, excludes the general one. The Tribunal was also of the view that the Act does not provide any rules or principles to guide the Wealth Tax Officer as to when he can value the assets of business under Section 7(1) and when he can do so under Section 7(2) and that in the absence of any such guiding and governing principles, the absolute and unfettered discretion allegedly vested in the Wealth Tax Officer was likely to degenerate into discrimination and would offend the prohibition contained in Article 14 of the Constitution. According to the Tribunal, such construction had to be avoided.

(8) The Tribunal was also of the opinion that if the construction suggested by the Revenue were accepted Section 7(2) would appear to be wholly redundant. The word 'may' in Section 7(2) had the meaning of 'must' and that the valuation under Section 7(2)(a) was obligatory in respect of the valuation of the assets of the business where regular accounts of the business were being maintained.

(9) The Tribunal was further of the opinion that the asessee was only a partner in business and as such it could not be said that he had a specific share in any assets of the partnership. What a partner holds in a partnership is a right to seek a share in the surplus assets of the partnership after the debts and liabilities of the firm are discharged and that even after dissolution, the partnership property continues to belong collectively to the association of partners as one unit as before. The correct procedure of valuing the share of a partner in the partnership assets is thus to value the assets as. a whole and then to determine the partner's share. The procedure followed in the present case about the assessed's holdnig one-half share in the property and to value the property separately, was thereforee not a proper one. The words 'as a whole' in Section 7(2)(a) had to be given their proper place and meaning. They showed that the valuation of the assets of a business had to be made as a whole and not piecemeal. The power to make necessary adjustments as provided for under Section 7(2)(a) did not warrant the piecemeal valuation of one of the assets and its market value under S. 7(l).

(10) The question involved in the case is obviously of great importance as a similar situation is likely to arise in a large number of cases. The question in short is whether in a case where the assessed is carrying on a business for which accounts, are being maintained by him regularly, is it open to the Wealth Tax Officer to determine the value of some of the assets under sub-section (2) (a) and to determine the value of other assets in the said business under sub-section (1) of S. 7

(11) At the request of the Commissioner the question that has been re-produced above, was thereforee referred for the opinion of this Court.

(12) Before dealing with Section 7 to which we shall presently refer, Mr. G. C. Sharma, learned counsel for the Revenue d.rew our attention to the definition of 'net wealth' in Section 2(m) of the Act. According to that section, the words 'net wealth' mean the amount by which the aggregate value computed in accordance with the provisions of the Act of all the assets, wherever located belonging to the assessed on the valuation date, including assets required to be included in his net wealth as on that date under the Act, is in excess of the aggregate value of all the debts owed by the assessed on the valuation date other than the assets mentioned in classes (i), (ii) and (iii) thereof.

(13) Section 3 relates to the charge of wealth tax in respect of the net wealth of every individual, Hindu un-divided family and company on the corresponding valuation date, at the rate or rates specified in the Schedule. Section 4 provides for addition of certain items for computing the net wealth of an individual while Section 5 deals with exemption in respect of certain assets. S. 6 relates to an individual who is not a citizen of India or an individual or a Hindu un-divided family not resident in India or resident but not ordinarily resident in India or a company which is not a resident of India during the year ending on the valuation date. It is only Section 7 which deals with the determination of the value of the assets other than cash.

(14) It will be seen that according to Section 3, there are only three units of assessment under the Act. One of them is an individual while the other two are a Hindu un-divided family and a company. Partnership as such is not a unit of assessment and thereforee for the purpose of arriving at the net wealth of a partner he has to be treated as an individual and the determination of his assets has also to be worked out in that capacity.

(15) Section 46(2)(a) confers powers on the Central Board of Direct Taxes to make rules for the manner in which the market value of any asset may be determined. Rule 2 of the Wealth Tax Rules, 1957 which came into force on the first day of April 1957, provides for the valuation of interest in partnership or association of persons. In brief, the value of interest of a person in a firm of which he is a partner, has to be determined in the manner provided in the said rule. What is required is that the net wealth of the firm shall first be determined and after that is done, that portion of the net wealth of the firm as is equal to the amount of its capital should be allocated among the partners in the proportion in which capital has been contributed by them. The residue of the net wealth of the firm has then to be allocated among the partners in accordance with the agreement of partnership for the distribution of assets in the event of dissolution of the firm or in the absence of such agreement, in the proportion in which the partners are entitled to share profits. The sum total of the amounts so allocated to a partner or member has then to be treated as the value of the interest of that partner in the firm.

(16) Mr. Sharma thereforee contended that although under the general law of partnership as contained in Sections 14, 15 and 46 of the Indian Partnership Act, it could not be postulated of any partner that he had a specified share in any partnership asset, a specific provision had been made under Rule 2 of the Wealth Tax Rules, 1957 to determine the valuation of interest of an individual in a partnership firm. This provision was necessary because under the Act a partnership as such is not a unit of assessment and it is the interest of an individual in the said partnership that has to be determined and has to be subjected to the provisions of the Act for the purpose of exigibility to the Wealth Tax.

(17) It is no doubt true that the procedure for valuing the share of a partner in the partnership assets, is to value the assets as a whole and then to determine the partner's share, but the procedure for valuing the net wealth of the firm is what is laid down in Rule 2. In the present case, the amount of capital contributed by each partner is Rs. 55,160.52, while so far as the residue of the net wealth of the firm is concerned it has to be allocated among the partners in accordance with the agreement of partnership or in the absence of such agreement in the proportion in which the partners are entitled to share profits. The agreement between the two partners has not been placed on record, but the statement of the case makes it plain that both of them have equal shares. It is thereforee the sum total of the amount so allocated to a partner which has to be treated as the value of the interest of that partner in the firm. The separate valuation of one of the assets of the business will thereforee not make any difference even though the business is valued as a whole. From all accounts the two partners have equal shares in partnership and as such there is nothing wrong about No. 2 Keeling Road being treated as belonging to them in equal shares.

(18) The question (that still remains) to be decided is with reference to Section 7 of the Act. Section 7 consists of two parts. Under subsection ( 1) the Wealth Tax Officer is required to determine the price which in his opinion, the asset would fetch if sold in the open market on the valuation date. In other words, it is the market value of the property on the valuation date. Ordinarily, this is the rule in all cases of assessment under the Act. Sub-section (2) of Section 7 however states that notwithstanding anything contained in sub-section ( 1 ) if the assessed is carrying on a business for which accounts are maintained regularly, the Wealth Tax Officer may instead of determining separately the value of each asset, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making necessary adjustments therein.

(19) In the instant case, it is common ground that the assessed is carrying on business and its accounts are also being maintained regularly. The Wealth Tax Officer has also not determined the value of the various assets of the assessed's business which he might have done under sub-section (1) of Section 7. Instead, he took recourse to sub-section 2(a) of Section 7; but while-doing so he accepted the balance sheet as giving the net value of the assets of the business as a whole with the modification that the value of No. 2 Keeling Road property should be determined as if it were being sold in the open market on the valuation date. The Tribunal says that he could not have done so, as in its opinion sub-section (1) of Section 7 is a general provision while sub-section (2) of Section 7 is a special provision and the normal rule of construction is that the special provision excludes the general one. In any case, the Wealth Tax Officer could not make use of sub-section (2)(a) of Section 7 in respect of other items of the assessed's business and deal with No. 2 Keeling Road under sub-section (1) of Section 7.

(20) This raises the question as to whether sub-section 2(a) of Section 7 is a special provision while sub-section (1) of Section 7 is a general one.

(21) In all cases to which our attention has been invited by the learned counsel for the Revenue, the distinction between sub-section (1) of Section 7 being a general provision and sub-section (2)(a) of Section 7 being a special provision, has not been drawn. On the other hand the two parts of Section 7 have been regarded as alternative provisions. Reading the two parts of Section 7 together, what we find is that the Wealth Tax Officer has been given a discretion either to value each of the assets on the basis of its open market-value or take the net value of the assets of the business as a whole having regard to the balance sheet of such business, subject to such adjustments as he may consider necessary. If he follows the first method, namely, by valuing each of the assets, he will have to determine the market value of the assets on the valuation date. On the other hand, if he follows the second method, he will have to take the net value of the assets of the business as a whole, having regard to the balance sheet of such business and to make such adjustments therein as the circumstances of the case may require. The asset whether in business or otherwise has a value. For the purposes of the Wealth tax, it is the real-value of the asset that has to be determined. In other words, what price it would fetch, if sold in the open market. That would be the value of the asset on the valuation date.

(22) The main object of Section 7, (as it appears to us,) is to evaluate assets as. on the valuation date and that evaluation should be on the basis of the market value. In this view of the matter, it cannot be said that the provision contained in sub-section (2) (a) of S. 7 is a special provision which will exclude the application of sub-section ( 1 ) to section 7 which is of a general nature. It is for this very reason that when the Wealth Tax Officer follows the second method he will have to take the net value of the assets of such business as given in the balance sheet. Ordinarily, thereforee, that value has to be accepted; but if the circumstances so require, it will be open to the Wealth Tax Officer to make such adjustments therein and those adjustments will have to be in consonance with the value of the asset if sold in the open market on the valuation date. The two parts of Section 7 have thereforee not to be read as being separate from each other and if you follow the one you cannot follow the other. If the Wealth Tax Officer has to take the net value of an asset of the business as a whole as given in the balance-sheet there can be no possibility of his making such adjustments therein as the circumstances of the case require. The provision for making such adjustments in the balance sheet is thereforee an integral part of the procedure outlined in subjection 2(a) of Section 7. The Tribunal is. accordingly not right in thinking that sub-section 2(a) of Section 7 precludes the possibility of subsection (1) of the section being resorted to.

(23) Some of the decisions to which our attention has been drawn by the counsel for the Revenue make this position quite clear. In Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth Tax (Central) Calcutta : [1966]59ITR767(SC) , one of the three questions on which there was unanimity among the Judges of the Supreme Court was whether on the facts and in the circumstances of the case the Wealth Tax Officer was justified in taking the value of the assets of the assessed as shown in its balance sheet on the relevant valuation date. The assessed was a company of which the original cost of the fixed assets was Rs. 2,30,32,833. During the year ended March 31, 1950 the company made a re-valuation of its assets and added an amount of Rs. l,45,87,000.00 to the cost of the said fixed assets. After certain adjustments, the value of the fixed assets, was fixed at Rs. 2,60,52,357.00. These assets were shown in the balance sheet issued by the assessed from time to time at the added value less depreciation calculated on the original cost. In the balance sheet of the relevant accounting year also the said amount was shown as the value of the fixed assets. In connection with the assessment for Wealth tax, it was contended on behalf of the assessed that the appreciated value on re-valuation of the assets at Rs. 2,60,52,357.00 was done for other purposes and that it did not represent the real value of the assets. Apart from this argument there was nothing on the record to show that the said figure did not represent the correct value of the assets. It was held that under Section 211 of the Companies Act, every balance-sheet must give a true and fair view of the state of its affairs as at the end of the financial year. When the assessed itself had shown the net value of the assets at a certain figure, the Wealth Tax Officer rightly accepted the same as no one could know better the value of its assets than the assessed itself. It was open to the assessed to convince the authorities under the Act that the said figure was inflated for acceptable reasons, but no such attempt was made by it. It was also open to the Wealth Tax Officer to reject the figure given by the assessed and to substitute in its place another figure, if he was, for sufficient reasons, satisfied, that the figure given by the assessed was wrong. The question was thereforee answered against the assessed.

(24) This, case clearly shows that if circumstances exist it is open to the Wealth Tax Officer to reject the figure given by the assessed in its balance-sheet and to substitute in its place another figure.

(25) The next case is one on which reliance was placed by both sides. It is a decision of the Supreme Court in Commissioner of Wealth Tax. West Bengal Ii v. Tungabhadra Industries Ltd. : [1970]75ITR196(SC) . In this case, in the return for the assessment year 1958-59 the assessed had shown the total value of its fixed assets at Rs. 7,69,435.00. Actually the total value of the fixed assets as per balance sheet prepared by the assessed was Rs. 60,53,811.00 and that excluded the value of the land. This value was shown by the assessed on the basis of income-tax written down value and not on the basis of the balance sheet values as required under the global system of valuation. The Wealth Tax Officer was of the opinion that it was common knowledge that the value of imported machinery has increased considerably during the last few years and on the valuation date, according to him, their value could not be less than what was provided for in the balance sheet.

(26) The Income-tax Appellate Tribunal was however of the view that it would be fair to adopt the written down value of the assets as the value thereof for all the years under appeal. The High Court of Calcutta agreed with the Tribunal. On appeal to the Supreme Court. the decision of the High Court was reversed and it was held that in the absence of any material produced by the assessed to demonstrate that the written down value was the real value of the assets, the Wealth Tax Officer was justified in a normal case, in taking the value given by the assessed itself to its fixed assets in its balance sheet for the relevant year as the real value of the assets for the purpose of the wealth tax.

(27) The counsel for the assessed argued that the above decision lent support to his argument, namely, that while acting under Section 7(2)(a) the Tribunal cannot go outside the balance sheet and it is the net value of the assets of the business as given in the balance sheet which has to be accepted by the Wealth Tax Officer. The argument does not appear to us to be correct. What the Supreme Court was concerned in that case was to find out the total value of the fixed assets. Whereas the assessed had shown in its return the value of the said assets at Rs. 7,69,435, their actual value was Rs. 60,53,811/as shown in the balance-sheet. The power conferred upon the Wealth Tax Officer to make adjustments, as the circumstances of the case may require was for the purpose of arriving at the true value of the assets of the business. It was open to the assessed in any particular case, to establish after producing relevant materials that the value given to the fixed assets in the balance-sheet, was artificially inflated. It was also open to the assessed to establish by acceptable reasons that the written down value of any particular asset represented the proper value of the asset on the relevant valuation date. But in the absence of any such material to demonstrate that the written down value was the real value, the. Wealth Tax Officer was fully justified in a normal case in taking the value given by the assessed itself to its fixed assets in its balance sheet for the relevant year as the real value of the assets, for the purposes of the wealth tax. This case thereforee does not lay down that it is not open to the Wealth Tax Officer to go beyond the balance-sheet, if he finds that there are materials which justify him in making adjustments if the circumstances of the case so require. The real purpose of the inquiry made by the Wealth Tax Officer is to arrive at the true value of the assets of the business and for that figures in the balance-sheet are not sacrosanct.

(28) In Commissioner of Wealth-Tax West Bengal I. v. Aluminium Corporation of India Ltd. : [1970]78ITR483(SC) the value of the fixed assets, viz. lands, buildings and plant and machinery were shown in the assessed's balance sheet as on March 31. 1957 at Rs. 5,10,657.00, Rs. l,04,74,800.00 and Rs. l,78,32,641.00 respectively. The increase in the value of the fixed assets owing to re-valuation continued to remain un-altered. These values were arrived at after providing for some depreciation. In the matter of assessment for the year 1957-58 the Wealth Tax Officer applied the global method of valuation sanctioned by Section 7(2)(a) of the Act and adopted the value of the fixed assets as shown in the balance sheet of the assessed as on March 31,1957. On behalf of the assessed it was claimed that the re-valuation arose in order to determine the re-placement value of assets for the purpose of insurance. In the directors' report that reason was not mentioned and the assets had been insured since 1952 and the 'reinstatement value clause' was in existence even at that time. The contention of the assessed was rejected by the Supreme Court and the re-valued figures as shown in the balance sheet were accepted.

(29) It may be argued that in all the three cases to which our attention was invited, the controversy between the parties rested mainly on the figures given in the balance-sheet which were accepted as representing the true value of the assets, while in the present case the Wealth Tax Officer has gone beyond the balance sheet. It will however been seen that it is implicit in the above judgments that while exercising powers under Section 7(2)(a) the Wealth Tax Officer could go beyond the balance-sheets. We may now turn to some of the judgments of the High Courts to see if such a thing could be done.

(30) In Commissioner of Wealth Tax, Mysore v. Mysore Commercial Union Ltd. 55 I.T.R. 588 there was global valuation of the assets, of the business under S. 7(2)(a) but while doing so it was said by Hegde J. (as his Lordship then was) that the Wealth Tax Officer could proceed to make the valuation under sub-section (2) and take the balance sheet of the business as the basis for making the valuation and make such adjustments as he considered necessary' The learned Judge rejected the view that when a global valuation is made under Section 7(2)(a) the valuation given in the balance sheet is conclusive of the matter, and there is no competence in the Wealth Tax Officer or the Tribunal to travel outside the balance-sheet for finding out the true value of the assets.

(31) In Commissioner of Wealth Tax Gujarat v. Raipur Manufacturing Company Limited : [1964]52ITR482(Guj) it was said that when acting under Section 7(2) a discretion has. been given to the Wealth Tax Officer to make adjustments in the valuation as given in the balancesheet as the circumstances may require. A written down value may be more approximate to the price which an asset would fetch if sold in the open market. But in a case where assets have appreciated in value, the written down value cannot be considered to represent the price which the asset would fetch if sold in the open market on the valuation date.

(32) In Commissioner of Wealth Tax West Bengal v. Birla Jute . : [1967]65ITR568(Cal) the Wealth Tax Officer acting under Section 7(2) of the Act took for the assessment year 1957-58 the value of the assets of the assessed at Rs. 5,01,40,897.00 as shown in the balance sheet on the relevant valuation date, namely, March 31, 1957. The assessed claimed that a sum of Rs. l,45,00,000.00 should be deducted for the reason that the book value had been enhanced in 1948-49. The Tribunal, reversing the Income-tax Officer and the Appellate Assistant Commissioner, agreed with the assessed. On a reference to the High Court it was held by a Division Bench of Calcutta High Court (1) that the balance-sheet prepared by a company incorporating therein the revised valuation of its assets is not conclusively binding either on the assessed or on the department; (2) that the valuation in that case was done with a motive and purpose and was thereforee not the proper valuation and (3) that though the Tribunal was in essence right in excluding the sum of Rs. l,45,00,000.00 the proper approach should have been for an ascertainment of the value without relying on the balance sheet, for the addition of Rs. l,45,00,000.00 might not have been correctly made and that the net value will have to be ascertained under Section 7(1) of the Act. As a result, the answer given by the High Court entailed a review of the assessment by the Tribunal in the light of the observations made in the judgment.

(33) The case of Madan Gopal Radheylal v. Commissioner of Wealth Tax : [1968]68ITR735(All) decided by the High Court of Allahabad, appears, to us to be more directly in point. In that case the assessed, a Hindu undivided family had valued its closing stock for the assessment year 1961-62 at cost in accordance with its usual practice. The Wealth Tax Officer however valued it at market-price. The assessed's contention was that in view of Section 7(2)(a) of the Act, the Wealth Tax Officer should have valued the shares only on the basis of the global valuation as shown in its balance sheet. This contention was rejected by the departmental authorities and the Tribunal. On a reference to the High Court it was held that as Section 7(2)(a) provides only an alternative procedure for valuing the assets and not the sole method, the Wealth Tax Officer was at liberty to follow the procedure provided in Section 7(1) of the Act. The order of the Tribunal was held to be correct.

(34) It may be mentioned here that the assessed in that case did not deal in shares of companies only. It also had income from dividends. properties and a share in the partnership firm of Radheylal Garg and Co, The question regarding valuation of the share held by the assessed, was one of the items of business of the family. The assessed insisted that the procedure provided by Section 7(2)(a) of the Act and not that provided by Section 7(1) should be followed. But the contention was not accepted and it was not said that the Wealth Tax Officer was bound to follow the procedure provided in Section 7(2)(a). and was not free to have recourse to the provisions of Section 7(1) of the Act.

(35) The case of Kikabhai Bhagubhai and another v. Commissioner of Wealth Tax, Gujarat : [1969]72ITR586(Guj) decided by the High Court of Gujarat relates to two firms, namely, Kikabhai Bhagubhai and Ramprasad Kantilal Bhagat. Both these firms were dealers in shares and kept regular books of account for their respective share businesses and for other activities. In the case of Kikabhai Bhagubhai the value of the shares in stock shown in the balance sheet, as on the valuation date i.e. November 8, 1961 was Rs. 3,10,279.00 while in the case of Ramprasad the value of the shares in stock as on the valuation date i.e. October 20, 1960 was Rs. l,72,334.00 and Rs. l,52,513.00 on November 8, 1961. The assesseds claimed that the shares in stock should be valued on the basis of the books of account and the balance sheets drawn in the light of those books and in that connection relied upon Section 7(2)(a) of the Act. The Wealth Tax Officer did not accept that contention and the shares in stock were valued at the prevalent market price as on the relevant valuation dates. His view was confirmed by the Appellate Assistant Commissioner. In further appeals to the Tribunal, the Tribunal came to the conclusion that the Wealth Tax Officer had the authority to complete the valuation of the assets under S. 7(l) and was well within his rights in doing so. In connection with the assessed Kikabhai Bhagubhai the valuation on the basis of the market-price as on November 8, 1961 came to Rs. 9,21.212.00 as against the book value of Rs. 3,10,279,-. In the case of Ramprasad Kantilal Bhagat the valuation on the basis of the market price came to Rs. 3,25,379.00 as against the book value of Rs. l,72,334.00. Similarly, for the assessment year 1962-63 i.e. as on the valuation date, November 8, 1961, the book value of the shares came to Rs. l,52,513.00, but on the basis of the market value he decided to go in for the valuation of each asset in that particular business.

(36) As regards the use of the word 'may' occurring in Section 7(2)(a) which the Income-tax Appellate Tribunal in the instant case,. has interpreted to read as 'shall' or 'must', it was said that that interpretation cannot be accepted in view of the scheme of Section 7.

(37) In Commissioner of Wealth Tax, Gujarat v. New Rajpur Mills Ltd. (56 I.T.R. 544) decided by the High Court of Gujarat the question before the High Court was whether the Wealth Tax Officer had power under Section 7(2)(a) of the Act to make adjustments in the valuation of the fixed assets appearing, in the balance sheet of the assessed. It was held that he had that power but he could do so only if the circumstances of the case required that to be done.

(38) All these cases go to show that while making assessment under Section 7(2)(a) it is open to the Wealth Tax Officer to make necessary adjustments in the balance sheet if the circumstances of the case so require.

(39) Mr. Sharma further contended that under S. 7(2)(a) the determination of the net value of the assets of a business as a whole, is based on the balance sheets of being kept in view. but it docs not follow from this that the balance sheet is all in all and it is not open to the Wealth Tax Officer to travel outside the balance-sheet. The words used in sub-section (2)(a) of S. 7 are 'Having regard to the balance sheet of such business as on the valuation date.' According to Mr. Sharma, the meaning of the words 'having regard to the balancesheet' is that the Wealth Tax Officer has to keep the balance-sheet in view. According to the Privy Council's decision in Ryots of Garabandho v. Zamindar of Parlakimedi (70 Indian Appeals 129) (10) the expression 'have regard to' or 'having regard to' has no more definite or technical meaning than that of ordinary usage, and it only requires that the provisions, to which regard must be had should be taken into consideration. This view of the Privy Council was approved by the Supreme Court in Karam Singh Sobti and another v. Sri Pratap Chand and another : [1964]4SCR647 . When the law requires that the Wealth Tax Officer should take the balance sheet into consideration, it does not mean that he is bound by the balance-sheet, particularly so when there is a provision in subsection (2) (a) that he can make such adjustments therein as the circumstances of the case require.

(40) Mr. Karkhanis, learned counsel for the assessed, however contended that the same expression had come up for consideration before the Supreme Court in the case of Hari Shankar v. Girdharilal Chowdhury (A.I.R. 1963 S.C. 698) (12) and again in the case of V. K. Verma v. Radhey Shyam : AIR1964SC1317 (13) where it was said that if the law requires the Court to have regard to certain provisions and the Court does not pay that regard, it cannot but be said that the trial has not been according to law. He thereforee, urged that if the Wealth Tax Officer travels outside the balance sheet it is apparent that he does not show any regard to the balance sheet. What follows from the above cases, is that the Wealth Tax Officer cannot dis-regard the balance sheet. It is not for him to say that he will determine the net value of the assets of a business by dis-regarding the balancesheet. He has to take the balance sheet into consideration and if he finds that the value given therein is not the true value of the assets, he can make adjustments therein.

(41) Mr. Karkhanis next referred us to a decision of the Supreme Court in Pandyan Insurance Co. Ltd. v. Commissioner of Income-tax, Madras : [1965]55ITR716(SC) where the words 'having due regard' were used in rule 3(b) and rule 6 of the Schedule to the Income-tax Act for computing the profits of a general insurance company. Although the said rule specifically empowers the income-tax Officer to adjust the accounts of an insurer, as laid down in the proviso to rule 3(b), it was said that it did not empower the Income-tax Officer to adjust the accounts of an insurer, on the basis of re-valuation made by him or to correct the discrepancy between that is entertained in the accounts and what is a fact.

(42) An examination of that rule however makes it plain that in the proviso such an adjustment had to be made in respect of certain matters only and when the Income-tax Officer sought to make any other adjustments, it was held that he could not do so. In the instant case, there is no such provision in sub-section (2)(a) of Section 7. The only requirement of sub-section (2)(a) of Section 7 is that the Wealth Tax Officer should take the balance sheet into consideration and not that he is bound by it.

(43) It is thus clear that the Wealth Tax Officer had the option to proceed under Section 7(1) to value each asset separately. In the present case what he did was to value one of the assets of the business under S. 7(l) while the valuation of the other assets was allowed to remain as in the balance sheet. If the Wealth Tax Officer could do so in respect of each asset of the business separately under Section 7(1) he could also do so in respect of one of the assets of the said business.

(44) The Tribunal said that if the intention of the legislature was to invest the Wealth Tax Officer with a discretion to resort to the method of valuation under Section 7(1) in a case which is normally covered by Section 7(2) it would have certainly provided rules to guide his discretion lest it may degenerate into discrimination in violation of Article 14 of the Constitution. The argument, if we may say so, with great respect, is not sustainable.

(45) The section as it stands, gives sufficient guidance to the Wealth Tax Officer. There is provision in it for two alternative methods of valuing the assets and there is also provision in it for sufficient guidance turn the Wealth Tax Officer. The object of the section is to find out the true value of the asset. One of the methods employed in the section is that it should be valued at the price which in the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date. This is what sub-section ( 1 ) of Section 7 lays down. In the other case where the valuation of the assets is of a business for which accounts are maintained regularly, the determination is primarily to be done by keeping in view the balance sheet of such business as on the valuation date; but since the object of the section is to find out the true value of the assets the power of the Wealth Tax Officer is canalised and guided and he is told that his discretion is not un-fettered and that if he is of the opinion that the net value of the assets is not as shown in the balance sheet he can make such adjustments therein as the circumstances of the case require. The section thereforee affords sufficient guidance to the Wealth Tax Officer and it is not proper to say that the discretion conferred on him is likely to degenerate into discrimination and thus violate Article 14 of the Constitution.

(46) Mr. Karthanis lastly invited our attention to a circular issued by the Central Board of Revenue (now called Central Board of Direct Taxes) being C.B.R. Circular No. 3 W.T. of 1957 dated the 28th September, 1957. This Circular has been published in the 1966 Edition of A.C. Sampath Iyengar's treatise on 'The Three New Taxes' at page 193 of the book and reads :-

'WHEREthe valuation of the various assets of a business is likely to involve difficulty, section 7(2) enables the Wealthtax Officer to evaluate the assets in bulk, taking the business as a whole. As a matter of practice, the Wealth tax Officer should ordinarily apply this 'global valuation' in all cases of business, particularly in the case of companies, if the accounts have been found to be reliable, and there is no reason to suspect any fraud on the part of the assessed ............

(47) The contention urged by Mr. Karkhanis is that according to this circular the Wealth-tax Officer is ordinarily required to apply the global valuation in all cases of business, particularly in the case of companies, if the accounts have been found to be reliable and there is no reason to suspect any fraud on the part of the assessed. According to him the same principle should apply also to the case of individuals as well as partners, particularly when it has been found that the accounts are reliable and there is no reason to suspect any fraud on the part of the firm. It is no doubt, true that this is the ordinary methods which the Wealth Tax Officer is required to apply, particularly in the case of companies. But does it imply that merely because this is the ordinary method of valuing the assets of a business as a whole, it should be treated as a direction from the Central Board of Revenue that the Wealth Tax Officer must follow that particular method? To interpret the said circular as laying down a rule of law with regard to the meaning of Section 7(2)(a) would make the provisions of the section which empower the Wealth Tax Officer to make adjustments in the balance sheet if the circumstances of the case so require, wholly nugatory. We thereforee, do not read the said circular to have the meaning that Mr. Karkhanis would like to ascribe to it.

(48) We may mention here that the legislature itself had the same intention when it substituted by Act No. 46 of 1964 for the words 'the value' the words 'subject to any rules made in this behalf' at the beginning of sub-S. (1) of S. 7, and it also added the words 'may be prescribed in sub-section (2) (a) of Section 7'. By Wealth Tax (Second Amendment) Rules 1965, rules 2 (a) to 2(g) were inserted in the Wealth Tax Rules, 1957. By that addition the Wealth Tax Officer who was required to determine under clause (a) of sub-section (2) of S. 7, the net value of the assets of the business as a whole having regard to the balance sheet of such business, was required to make the adjustments specified in rules 2(b), 2(c), 2(d), 2(e), 2(f) and 2(g). The object of this amendment was to circumscribe the powers of adjustment which the Wealth Tax Officer had and not that it conferred any extra powers on him which he did not have under the original section and rule 2 that stood before. We also find that although the total cost of the property was Rs. l,26,996.00 and that was its value as shown in the balance sheet as on 31-3-1961 which as we have said before, is the valuation date in this case. But in the Wealth Tax assessments for the years 1957-58 to 1960-64 this property was valued at Rs. 2,00,000.00. No objection was however, taken by the assessed to this valuation for if the property was to be valued after deducting depreciation, its actual value on 31-3-1961. would have been very much less. This again shows that the assessed had no objection to the property being valued according to its market price. The difficulty arose when the Wealth Tax Officer raised the above value to Rs. 5,00,000.00.

(49) The question is thereforee decided in favor of the revenue and against the assessed. The Commissioner will also have his costs. Counsel's fee Rs. 300.00.